1 At year-end, the executives awarded a bonus of $8 000 to their marketing manager for his outstanding performance during the year. However, due to cash constraints the bonus was not to be paid. Advise the accountant if a liability exists. (5 marks)

2 )Trinity Medical Laboratory Ltd (TMLL) a medical research entity, has discovered a cure for a previously incurable disease. TMLL is protecting the drugs formula by keeping it secure in the company vault, rather than by patenting it. TMLL shortly plans to start discussions with vitally interested pharmaceutical companies about producing the drug for commercial sale. Being the first of its kind and, therefore, unique, TMLL has no idea as to the formulas value. Costs incurred to date in developing the formula are impossible to identify, given that the cure was discovered as a by-product of another research project. Advise the accountant if an asset exists.

Note: The question requires you to use assets and liability definition to say whether in question 1 liability exists and in question 2 assets exist